Skip to main content

Full text of "Senate Doc 43 Money Banking History Senate 43.pdf (PDFy mirror)"

See other formats

73d Congress 
1" Session 



No. 43 





Submitted by M r. Shipstead 


A pril 17 (calendar day, A pril 24), 1933. 

Resolved, That the manuscript entitled "Contracts Payable in 
Gold", by George Cyrus Thorpe, showing the legal effect of agree- 
ments to pay in gold, be printed as a Senate document. 

Edwin A. Halsey, 




By George C.Thorpe, Washington, D.C. 

Holders of commerdal paper and parties to contracts, involving 
billion of dollars, stipulating for payment in dollars in gold, or "in 
American gold coin" or "in gold coin of the United States of or equal 
to the standard of weight and fineness existing" on a certain date, or 
"in gold and silver coin, lawful money of the United States", etc., are 
interested in the legal import of the qualifying phrases, in the face of 
present suspension of gold payments and the possibility of a 
depreciated currency. 

In a recent English case, Mr. Justice Farwell, in chancery, has held, 
under a bond providing for payment of "the sum of 100 pound 
sterling in gold coin of the United Kingdom of or equal to the 
standard weight and fineness existing" on the date of the bond, there 
was an obligation to pay 100 pounds in gold currency, satisfied by 
tendering 100 pounds in gold currency, satisfied by tendering 100 
pounds in any form that was legal tender in England, (In re Societe 
I ntercomunale Beige d 'El ectri cite.) 

A similar conclusion was reached in many American cases in State 
courts when their jurisdiction first was invoked to give effect to the 
effort of businessmen to avoid loss through compulsory acceptance 
of a tender of depreciated currency in payment of debts incurred for 
a gold consideration, i n the era of the "greenbacks." 

The laws of the United States recognize two kinds of money, 
namely coin and paper. The term "dollars in specie" means gold or 
silver coined dollars. "Dollars in currency" means dollars in notes or 
any paper money current in the community. (Trebilcock v. Wilson 
(1872) 12 Wall. 687, 20 L. Ed. 460.) 

A Missouri contract of June 17, 1862, to pay "in the current gold 
coin of the U nited States, in full tale and count, without regard to any 
legal tender that may be established or declared by any law of 
Congress" was held satisfied by payments in the nominal value in 
any legal tender money. The court said that it was not a contract to 
be paid in bullion, or in so many pounds or ounces of gold, but in a 
certain number of dollars, in coin. The transaction did not regard 
gold as a commodity but as money. The Legal Tender Act had made 
Treasury notes of like value with gold. As a legal medium there 
could be no distinction between notes and gold. The theory of the 

suit brought on contracts payable in specific cliattels is tliat tlie 
court's judgment Is not for payment In articles in kind, but for the 
damages resulting to the creditor in consequences of breach of 
contract, and this judgment can be paid off and satisfied in whatever 
money the law has clothed with the attributes of legal tender. 
Although It was a notorious fact for purposes of trade and In 
commercial transactions a difference was made between Treasury 
notes and specie coin, whatever fluctuations might arise from 
extraneous causes, the debtor's right to pay in whatever medium he 
chooses could not be affected. In administering the law. It was 
necessary that gold and Treasury notes should be considered equal. 
(Appd V. Woltman (1860) 38 Mo. 194.) A note payable "in gold" was 
held enforceable only for the face value of the note payable in any 
lawful money, and a judgment for a premium on gold In addition 
was declared invalid. (H enderson v. M cPlke(1864) 35 Mo. 255.) 

A ground rent payable in "lawful silver money of the United States 
of America" was satisfied in Pennsylvania by payment of Treasury 
notes of the Issue of February 25, 1862, the court saying that the 
addition of the word "silver" was merely descriptive of the "lawful 
money" and bound neither party, It meant simply a kind of lawful 
money in which the tender could be made, not a prohibition of other 
forms of money. It was declared that no party could exact, and no 
party consent to, a stipulation Impugning the power of the law- 
making branch of the Government (Shollenberger v. Brinton (1866) 52 
Pa. St. 9.) 

In another Pennsylvania case, the defendant promised to pay a 
certain number of dollars, "silver money of the United States, each 
dollar weighing 17 pennyweights and 6 grains at least." Upon the 
plaintiff's demand for a certain amount due in 1863, the defendant 
tendered Treasury notes of the Issues of February 25, 1862, and July 
11, 1862. The plea of tender "In lawful money of the United States" 
was sustained. (M ervlnev. Sailor (1866) 52 Pa. St. 9) 

The decision was the same way in another action in Pennsylvania 
on a promissory note wherdn there was a proems to pay a certain 
number of dollars "In gold, without defalcation", and the plaintiff 
demanded gold, or If the defendant had not the gold, that he would 
accept United States legal-tender notes, adding the premium on gold, 
33 percent. (Laughlln v. H arvey (1866) 52 Pa. St. 9, 30) 

In the same State, plaintiffs had deposited gold in the defendants' 
bank and received a certificate as follows: 

has deposited in this office- dollars, gold, payable 

to the order of herself on surrender of this certificate, in like funds, 
with interest. 

On demand for gold, the defendants offered legal tender notes, 
which was held sufficient. (Sanford v. H ays (1866) 52 Pa. St. 9, 26.) 

In a Pennsylvania action in assumpsit on a bank's promise to pay 
$14,145, the paper bearing on its margin "$14,145 specie", it was 

admitted that the consideration was gold and that "specie" meant 
payable in coin, gold or silver. A tender of legal tender notes was 
held good. (Graham v. M arshall (1866) 52 Pa. St. 9, 28.) 

In assumpsitfor money had an received, gold having been pledged 
a security, it was held that the damages should not include any 
premium on gold, and that, even if the action was in the form of 
trover only the value at the time of conversion could be allowed as 
damages. (Frothingham v. M orse (1864) 45 N .H . 545.) 

In New York, the words "in specie, gold, and silver coin" were held 
not to effect the right to discharge an obligation, for the payment of a 
certain number of dollars, by paying in legal tender notes. (M urray v. 
H arrison (1867) 47 Barb, 484, affirmed (1868) 52 Barb. 427.) So also a 
bill of exchange payable "in specieor its equivalent" could be paid in 
legal tender notes called "greenbacks." (Jones v. Smith (1867) 48 Barb. 

In an Indiana case, a contract for payment in gold also provided 
that if paid in paper the amount thereof necessary to purchase the 
gold at the place of payment would be required. In sustaining a 
tender in paper money in the nominal amount of the debt the court 
said that when Treasury notes were made legal tender in payment of 
debts they were made the equivalent of coin as means of payment in 
all but the cases excepted by the law. "This, and this only, is meant 
by making them legal tender." For that purpose a Treasury note 
dollar could accomplish all that a gold coin dollar could accomplish, 
for by the law the latter would pay no more than $1 of indebtedness. 
The court could not know that its judgment would be paid in paper. 
There could be no warrant for a judicial assumption that the 
judgment debtor would discharge the judgment by payment in 
paper. Gold coin might be used. The court could not know that 
paper money would not be withdrawn from circulation before 
satisfaction of the judgment. (Brown v. Welch (1866) 116lnd. 117.) 

In Texas, a note made payable "in gold" was held dischargeable by 
the payment of legal tender notes; judgment on such a note could not 
be rendered for specie. (Shaw v. Trunsler (1867) 30 Tex. 390.) 

In the same State, the word "specie" in a judgment in an action on 
contract providing for payment of $500 in specie, or $894 in United 
States currency, was held surplusage that could be struck out on 
appeal. (Flournoy v. H ealy (189=69) 31 Tex. 590.) 

But the Supreme Judicial Court of Massachusetts was reversed I 
entering judgment for an amount in Treasury notes, equal in market 
value to the amount of coined gold reserved as rent in a lease 
wherein the contract provided for a yearly rent of 4 ounces 2 
pennyweights and 12 grains of pure gold in coined money, the 
Supreme Court of the United States saying that the contract was for 
the payment or delivery of a specified weight of pure gold, solvable 
in coined money, and the judgment should have been entered for 
coined dollars and parts of dollars, instead of Treasury notes 

equivalent in marl<et value to the value in coined money in the 
stipulated weight of pure gold. (Dewing v. Sears (1871) 11 Wall. 379, 
20 L.Ed. 189.) 

Earlier, but after the passage of the Legal Tender Acts, the Supreme 
Court had sustained the proposition that express contracts to pay 
coined dollars could be satisfied only by the payment of coined 
dollars, and that such contracts were not "debts" which could be 
satisfied by the tender of Treasury notes. (Bronson v. Rodes (1869) 7 
Wall. 229, 19 L.Ed. 141.) 

Our highest court said in another case that when it appears to be 
the clear intent of a contract that payment or satisfaction shall be 
made in gold or silver, damages should be assessed at the sum 
entered in coin for that amount. (Butler v. H orwitz (1869) 7 Wall. 258, 
19 L.Ed. 149.) 

Bronson v. Rodes, supra, became the leading case, followed by later 
decisions in State courts. But before that precedent there were 
decisions in State courts which enforced the qualifying phrase. 

Thus under a contract to return gold, the promissor was held 
bound to return the things specified, as he would be bound to return 
a specific quantity of any other certain commodity. The court's view 
was that "paper promises" having been substituted for a national 
money consisting of gold and silver coins, those metals had 
disappeared as current money and no longer possessed the functions 
of national instruments of exchange, becoming merely articles of 
commerce, having the same characteristics and being liable to the 
same legal disposition as other articles of commerce when subject 
matter of contracts. (Bank of Common wwealth v. Van VIeck (1867) 49 
Barb. 508.) 

And a stipulation to pay rent "in American gold coin" could not be 
discharged by payment in legal tender notes of a nominally equal 
amount with the gold promised, unless it should happen that the 
notes were at par with American gold in the market. (Myers v. 
Kauffman (1868) 37 Ga. 600, 95Amer. Dec. 367.) 

A note given in August 1863 providing— 

Six months after date, without grace, for value received, I promise to pay 

to the order of A the sum of dollars in gold coin of the standard 

value of 1860 of the U ni ted States of America, with inters at . And 

if said principal and interest is not paid in gold coin, as above stated, then, 
for value received, I promise to pay to the order of said A, in addition 
thereto, and as damages, such further amount and percentage as may be 

equal to the difference in value at market between such gold coin 

and paper evidence of i ndebtedness of the States or of the U nited States that 
are or may be hereafter made a legal tender in payment of debts by the laws 
of this State or of the U nited States — 

was construed as manifesting a first intention of the payee to secure a 
payment I gold if such payment could be enforced lawfully; and. 

secondly, if that could not be done, payment in legal tender notes at 
their value (at the place stated in the note) when converted into gold. 
(Lanev. Gluckauf (1865) 28Cal. 288, 87Amer. Dec. 121.) 

The plaintiffs, depositors in defendants' bank, alleged a banking 
custom in the District of Columbia of receiving gold and silver coin 
and money currency to be returned in kind, separate entries being 
kept as to the classes of money deposited, and balances maintained 
as to those classes; in February 1864, having a balance in coin, they 
drew checks for coin which the defendants refused to pay in coin; 
that coin at that time was worth $1.57 in Treasury notes. Plaintiffs 
sought compensation in damages for injuries resulting by the 
defendants' refusal to pay the checks. Defendants plead: (1) That 
they did not promise as alleged, and (2) that, upon presentation of 
the checks, they offered to pay i n Treasury notes made legal tender i n 
payment of debts by the act of February 25, 1862. 

The trial court excluded testimony offered to prove the alleged 
custom as to the difference in receiving and paying deposits in coin 
and paper money, and instructed the jury: 

If the jury find from the evidence that the defendants were bankers in 
1861 and 1862 and that the coin mentioned in the declaration was deposited 
with said defendants as banker, to be paid in coin, said deposit created a 
debt from the defendants to the plaintiffs which could be discharged by 
payment or offer to pay the same in legal tender notes; and if the jury 
further find that said tender was made, the plaintiffs are not entitled to 

In affirming judgment of the defendants, the Supreme Court said 
that the clear inference from the whole testimony was that the 
deposits were made without condition or special agreement of any 
kind, and that in such cases the law was well settled that the 
depositor parts with title to his money and loans it to the bank, and 
the transaction is not affected by the character of the money in which 
the deposit is made. The bank becomes liable for the amount of the 
debt, which can be discharged by such money payment as is by law a 
legal tender. (Thompson v. Riggs (1867), 5 Wall. 663, 18 L.Ed. 704.) 

However, the court also said that contracts between a banker and 
his customers doubtless are required to be performed, and must be 
construed in the same way as contracts between other parties. 

When the banker specifically agrees to pay in bullion or in coin he must 
do so or answer in damages for its value; and so if one agrees to pay in 
depreciated paper the tender of that paper is a good tender, and in default 
of payment the promisee can recover only its market value and not its 
nominal value. (Same case.) 

All of these American decisions were rendered long before the 
enactment of the Parity Act of 1900, providing that - 

The dollar, consisting of 25.8 grains of gold nine-tenths fine shall be the 
standard unit of valuer and all forms of mon^ issued or coined by the 
United States shall be nnaintained at a parity of value with this standard, 
and it shall be the duty of the Secretary of the Treasury to nnaintain such 

This has not been repealed. Other existing statutes provide: 

(a) The gold coins of the United States shall be legal tender in all 
paynnents at their nonninal value when not below the standard 
weight and limit of tolerance provided by law for the single piece, 
and, when reduced in weight below such standard and tolerance, 
shall be legal tender at valuation in proportion to their actual 
weight. (R.S., sec. 3585) 

(b) Silver dollars coined under the act of February 28, 1878, together 
with all silver dollars coined by the United States of like weight 
and fineness prior to the date of such act shall be a legal tender, at 
their nominal value, for all debts and dues, public and private, 
except where otherwise ©<pressly stipulated in the contract. But 
nothing in this section shall be construed to authorize the payment 
in silver of certificates of deposit issued by the Secretary of the 
Treasury for deposits of gold bullion. (Act Feb. 28, 1878, c. 20, sec. 
1,20 Stat. 25.) 

(c) The silver coins of the United States in ©<istencejune 9, 1879, of 
smaller denominations than $1 shall be a legal tender in all sums 
not exceeding $10 in full payment of all dues, public and private. 
(Act June 9, 1879, c. 12, sec. 3, 21 Stat. 8.) 

(d) The minor coins of the United States shall be a legal tender, at 
their nominal value, for any anrxjunt not exceeding 25 cents in any 
one payment (R.S. sec 3587.) 

(e) Various commemorative silver and gold coins (50-cent piece, gold 
dollar and gold $2.50 pieces), coined at the mints of the United 
States under authority of law, area legal tender in any payment to 
the amount of their face value. (Various statutes compiled in 
section 461 of title 31 of the U .S. Code) 

(f) Gold certificates of the U nited States payable to bearer on demand 
shall be legal tender in payment of all debts and dues, public and 
private. (Act Dec. 24, 1919, c. 15, sec. 1, 41 Stat. 370.) 

(g) United States notes shall be lawful money, and a legal tender in 
payment of all debts, public and private, within the United States, 
except for duties on imports and interest on the public debt. (R.S. 
sec. 3588, derived from statutes passed in 1862 and 1863.) 

(h) Demand Treasury notes authorized by the act of July 17, 1861, 
chapter 5, and the act of February 12, 1862, chapter 20, shal I be 
lawful mon^ and a legal tender in like manner as United States 
notes. (R.S. sec 3589, derived fro acts of 1861 and 1862.) 

(i) Treasury notes issued under the act of July 14, 1890, chapter 708, 
shall be a legal tender payment of all debts, public and private, 
except where otherwise expressly stipulated in the contract. (Act 
July 14, 1890, c. 708, sec. 2, 26 Stat. 289.) 

(j) Treasury notes issued under the authority of the acts of IMarch 3, 
1863, chapter 73, and June 30, 1864, chapter 172, shall be a legal 
tender to the same ©<tent as United States notes, for their face 
value, ©(eluding interest: Provided, That Treasury notes issued 
under the act last named shall not be a legal tender in payment or 
redemption of any notes issued by any bank, banking association, 
or banker, calculated and intended to circulate as money. (R.S. 
3590, derived from acts or the dates stated in this section.) 

Is there anything in the legislation subsequent to the decision in 
Bronson v. Rodes, supra, 

which would require a different decision as to the legal import of 
such phrases as"dollarspayablein gold coin", etc.? 

In forming its opinion on the meaning of that phrase, the court 
found it "necessary to look into the statutes regulating coinage." 
After reviewing such statutes as it deemed pertinent to the inquiry 
concerning the import of the quoted phrase, it concluded that the 
contract for payment in gold should be enforced. The assertions in 
the court's opinion that: (a) Gold and silver coins are legal tender in 
all payments; (b) there are two descriptions of money in use, 
authorized by law, and both made legal tender in payments; and (c) 
the statute denomination of both descriptions is dollars, but they are 
essentially unlike in nature, the coined dollar being a piece of gold or 
silver of a prescribed degree of purity and weighing a prescribed 
number of grains, and the note dollar bang a promise to pay a 
coined dollar though not a promise to pay on demand or at any fixed 
time, present time, within the letter of the above-quoted statutes 
relating to legal tender, without regard to the parity act. 

Does the parity act, quoted above, make specie and currency 
equivalent if in fact one or the other should become depreciated in 
actual market value? 

The court said, that case, that it was "impossible, in the nature of 
things, that these two dollars should be actual equivalents of each 
other", and that there was nothing in the Currency Acts "purporting 
to make them such." How far they were from being actual 
equivalents had been stated earlier in the opinion, i.e., $1 in coin 
equivalent to $2.25 in United States notes. 

Under similar circumstances in the future the court still could say, 
"It is impossible, in the nature of things, that these two dollars 
should be actual equivalents of each other"; but could it say that 
there is nothing in the currency laws "purporting to make them 
such", in view of the parity act? 

The parity act does not declare that all forms of money issued or 
coined by the United States are at parity of value with the standard 
gold dollar, for that would be declaring to be a fact that which is not, 
or may not be, the fact, or cannot be the permanent fact. Value is 
purchasing power and that in turn implies varying degrees of 

willingness of holders of consumable commodities to exchange them 
for money. If both coin and currency are in circulation, the holder of 
a commodity desired by different groups of persons, one group 
possessing specie and the other group currency, will surrender in 
exchange for money a larger quantity or a better quality of the 
commodity for, say, specie, than for currency, of equal nominal 
amounts. No law declaring parity can achieve actual equal 
acceptability, or purchasing power. And so the parity act, in 
declaring that "all forms of money issued or coined by the United 
States shall be maintained at a parity of value with" the standard 
gold dollar, might be construed as the declaration of a policy or a 
mission, and the concluding clause, "it shall be the duty of the 
Secretary of the Treasury to maintain such parity", as the definition 
of a duty. 

When gold is unobtainable and currency in circulation, can it be 
said that specie and currency are at a parity? When both specie and 
currency are in circulation in such proportions that the citizens much 
prefer specie and actually will pay a premium therefore, can it be 
said that these two kinds of money are at parity of value with the 
standard gold dollar? If the Parity Act can be said to purport to 
make the two kinds of money actual equivalents of each other, but if 
as an actuality the two kinds of dollars are not, or may not be, 
equivalents, will the Supreme Court's judgment be the same, as 
before the passage of the Parity Act, if called upon to construe the 
legal import of promises to pay in specie? May it not again refuse to 
"suppose that it was intended by the provisions of the Currency 
Acts" and the Parity Act of 1900, "to enforce satisfaction" of contract 
to pay in coin "by the tender of depreciated currency of any 
description equivalent only in nominal amount to the real value of 
the bullion or of the coined dollars", as in Bronson v. Rodes, supra? 

Or shall we hear that the Parity Act is the declaration of something 
which must be accepted as fact, even though that be contrary to the 
operation of economic laws? 

The power to issue currency is not specifically given in the 
Constitution, the express authority to "emit bills" originally in the 
"Resolutions" before the Constitutional Convention having been 
stricken out on motion after considerable debate. Daniel Webster 
said in the Senate in 1836 that although no express prohibition from 
making anything but gold and silver a tender in the payment of 
debts is applied to Congress, yet as Congress has no power granted 
to it in that respect but to coin money and regulate its value and that 
of foreign coin, it clearly has no power to substitute paper or 
anything else for coin as a tender in payment of debts and discharge 
of contracts. (Webster's Works, vol. 4, p. 271.) For the first 70 years 
of this Government's existence there was no national currency, all 
transactions of the Government having been in gold and silver coin. 
Paper currency used in private transactions consisted almost entirely 

of bank notes issued by nunnerous independent corporations 
variously organized under State legislation, of various degrees of 
credit and very unequal resources, administered often with great and 
not infrequently with little skill, prudence, and integrity. National 
laws prohibiting the recdpt or disbursement of anything except gold 
and silver in the transactions of the Government and State laws 
requiring the exemption of bank notes in coin on demand prevented 
the disappearance of gold and silver from circulation. (See Veazie 
Bank v. Fenno (1869) 8 Wall. 533, 19 L.Ed. 482.) As a matter of 
history, paper money in the shape of bills of credit was issued by the 
Colony of Massachusetts about 1690 to pay the Army returning 
unexpectedly from a disastrous expedition against Canada. All the 
Colonies, at various times, followed this example. Sometimes these 
bills were made a legal tender in the payment of all debts. Some bills 
were receivable i n al I payments of taxes and d ues to the Government. 
Some were nominally payable in specie. Generally a certain fund 
was pledged for their redemption. But some were issued on the mere 
credit of the issuing Government. 

Although the power to issue currency was not expressly given to 
Congress by the Constitution, Congress has found the power implied 
and has called it into full activity since 1861 in undertaking to supply 
a national currency for the entire country. It has made currency 
receivable in payment of debts to itself; has provided for its 
redemption and its uniformity in description and value. (See Veazie 
Bank v. Fenno, supra.) To the enumeration of the powers of Congress 
is added that of making all laws which shall be necessary and proper 
for carrying the enumerated powers into execution, and all other 
powers vested by the Constitution in the Government of the United 
States, or in any department or officer thereof. (United States 
Constitution, art. 1, sec. 8, cl. 18.) The "sound construction of the 
Constitution must allow to the National Legislature that discretion, 
with respect to the means by which the powers it confers are to be 
carried into execution, which will enable that body to perform the 
high duties assigned to it in a manner most beneficial to the people. 
Let the end be legitimate, let it be within the scope of the 
Constitution, and all means which are appropriate, which are plainly 
adapted to that enc, which are not prohibited, but consist with the 
letter and spirit of the Constitution, are constitutional." (M 'Culloch v. 
State of M aryland (1819) 4 Wheat. 316, 4 L.Ed. 579.) 

So Congress has the implied power to issue currency and to 
provide for uniformity in description and value of its currency, as 
well as the express power to coin money and regulate the value 
thereof; but do those powers include the power to make the coined 
money, the value of which it can regulate, the exact equivalent of its 
currency, for the uniformity in description and value of which it can 
"provide"? Is this third power implied as "necessary" within the 
doctrine of M 'Culloch v. M aryland? 

The regulation of the value of coined money consists in fixing the 
classes of coins that shall be issued and a standard of measurement 
of specie. Similarly, it is possibleto classify bills or notes issued or to 
be issued and to declare the Government's promises as to their 
redemption and their receivability by itself in governmental 
transactions or in the payment of debts. For some 70 years of the 
Government's existence Congress acted under only one of these 
powers— that of coining money and regulating its value. Then it 
acted upon the other power— that relating to currency. The exercise 
of these different powers resulted in two kinds of national "money": 
(SeeBronson v. R odes, supra). But they did not produce two kinds of 
money of equal value— equal acceptability, equal purchasing power. 
Between 1862 and 1866 the premium on gold rose and fell from 30 to 
160 percent. (See Shollenberger v. Brinton (1866), 52 Pa. St. 9, 33.) If 
"money" is the medium for effecting exchanges and is a measure of 
value, when the law made both species and currency legal tender, 
without actual equal purchasing power, gold became a mere 
commodity or article of commerce (see Bank of Commonwealth v. Van 
VIeck, supra.) since it had inherent value as a metal, while currency 
had no inherent value, only conceptional value as ideal money. But a 
uniform medium of exchange is essential to the commerce and 
prosperity of every civilized and commercial people. Money as such 
is of value, or is in demand, not because it is more valuable than the 
quantity of property it will purchase, but because it readily can be 
exchanged for any article. (See Brown v. Welch, supra). The existence 
of two kinds of money, lacking uniformity of exchangeability, 
created an impossible situation, or, at least, a situation which tended 
to nullify the purpose of the legal tender laws. Obviously, some law 
was necessary to integrate the currency and legal tender laws. 

The enumerated power from which the power to pass such a law as 
the parity act may bethought to be implied is, of course, the power 
to coin money and regulate its value. The end sought to be 
accomplished is to maintain as "money" that which Congress 
expressly is empowered to coin, for that power is to "coin money" 
and not merely to stamp coins. The parity act became necessary in 
order to maintain the circulation of specie as money and in order 
effectively to regulate the value of coined money. The end sought to 
be accomplished by the parity act, therefore, is legitimate and within 
the scope of the Constitution. The parity act is an appropriate means 
plainly adapted to the end in view, i.e., to standardize money for use 
as a national medium of exchange. It is only by virtue of law that 
paper notes are money or legal tender; and it is only by virtue of law 
that either coin or paper has a declared value; and only by virtue of 
law can coin and paper be maintained at a parity in order to afford a 
proper medium of exchange. A parity law therefore is a necessary 
complement to the currency laws. 

The ultimate ownership of all property is in the State; individual 
so-called "ownership" is only by virtue of Government, i.e. law, 
amounting to mere user; and use must be in accordance with law, 
and subordi nate to the necessiti es of the State. The fact that citizens, 
at a given time, may prefer specie to currency, or vice versa, can not 
prevent Congress from enacting those laws which it deems necessary 
to the maintenance of a proper monetary system. If the law makes 
specie and currency equivalent for purposes of payment, a failure to 
pay a given sum in specie, according to contract, cannot possibly 
beget an obligation to pay a greater sum in legal-tender notes, 
whatever premium men may choose to five for gold, when forced to 
obtain it for a specific purpose, or when impelled by a spirit of 
speculation, or by a distrust of Government. (Brown v. Welch, supra.) 

While the courts cannot control our citizens' preferences for one 
kind of money over another kind, or prevent them from giving a 
premium for the one or the other kind of money, when the fiscal 
affai rs of the Government necessitate the adopti on of a certai n pol i cy, 
expressed in constitutional legislative enactment, such as the 
maintenance of a monetary system consisting of specie and currency, 
to be acceptable interchangeably as to the value of the dollar, the 
courts should not give effect to a stipulation impugning the power of 
the legislature to makesuch laws, and should not apply those laws to 
the construction of contracts i n such away as to defeat the legitimate 
purpose of those laws, upon the enforcement of which the very 
existence of the Government may depend, or, at least, the aggregate 
well-beingofthewholepeopleis contempi ated . 

As it is not strictly correct to say that a contract is "invalid" merely 
because the courts will not enforce it, since enforcement may be 
withheld from valid promises because some provision of law 
prohibits enforcement, such, for example, as the statute of 
limitations, or the want of a legal consideration, valid contracts may 
be made and carried out between parties, without regard to legal 
limitations, so long as the jurisdiction of courts is not invoked to 
enforce the agreement. But when judicial enforcement is sought, the 
courts must find all pertinent constitutional laws tacitly written into 
every contract they construe. 

So a contract to pay dollars tacitly includes the laws of the United 
States defining "dollar" and regulating the value thereof and 
prescribing its usability as money. And a contract to pay dollars "in 
gold" or in any other form of money of the United States, tacitly 
incorporates into that contract the parity act declaring all forms of 
money issued or to be issued by the U nited States at a parity. H ence, 
the courts, in construing such a contract, must read into that contract 
the parity act, and if the promisee brings an action on the contract, 
the defendant's plea that he has tendered in payment any money that 
is lawful tender under the laws of the United States, is good, since all 

forms of money are at a parity and the defendant's plea, in effect, is 
that he has tendered theequlvalent of the thing promised. 

Furthermore, although in Bronson v. Rodes, supra, the Supreme 
Court said that "when contracts made payable in coin are sued upon, 
judgments may be entered in coin dollars and parts of dollars", it is 
doubtful if it could so rule now, in view of the necessity of reading 
into the contract the parity act, for the court would be bound to 
recognize that dollars coined or issued by the United States are at a 
parity, from which it follows that judgments in all such cases must be 
for dollars, or for dollars and parts of dollars, without qualification as 
to coin or paper. If the promise to pay so many dollars in gold be 
restated as two promises, one to pay dollars and the other to pay in 
gold coin, the courts must read into those two promises the existing 
pertinent laws at the time of the demand, and give judgment on the 
promise to pay dollars (which may be satisfied by payment or tender 
in any lawful money that is legal tender), and give no effect to the 
promise to pay in gold coin since under the laws the second promise 
adds nothing to thefirst promise. 

In other words, the contract creates an obligation to pay dollars in 
gold, satisfied by tendering the stated number of dollars in any form 
that is legal tender of the U nited States.